Tariff Wars and Trade Deals With Costly Government
We study a simple model of tariff wars and trade deals in which government revenue collection and disbursement uses resources. The introduction of a costly government leads to lower non-cooperative tariffs, the possibility that a less costly government may win a tariff war, and fully cooperative trade deals where countries lower tariffs but do not eliminate them, even with lump-sum taxes and transfers.
|Date of creation:||2000|
|Date of revision:||08 Jun 2000|
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